Skip to main content

tv   Squawk on the Street  CNBC  December 4, 2015 9:00am-11:01am EST

9:00 am
our fine producers on "squawk box." we got to get cracking, because i think we have to be there. >> there's a wedding. >> congratulations! >> in an hour and a has. >> we're going to the wedding. >> we're going. some great food that i want to try. >> excellent. >> congratulations to both of them. join us on monday. have a great day. "squawk on the street" begins right now. good morning. welcome to "squawk on the street," i'm david faber with jim cramer. carl quintanilla hat day off. futures right now, we are set for a higher open after we got those employment numbers a half hour ago. european markets had been in the red given our performance yesterday. asia had been week. that's still the case in europe right now. the german dax has been the worst performer over the last couple of days. ten-year bund also adding some
9:01 am
yield over those last couple of days. how does oil look and the ten-year note? just got news from opec. there's the ten-year. is there anybody who doesn't expect there will be a rate rise in december? i'm sure there's somebody out there. they may be harder to find. our road map this morning starts with that jobs number. 211,000 jobs were added in november, plus upward revisions to previous months. the case building for that rate hike later this month. futures higher coming off an ugly day in the markets. energy names, jim and i will talk about that. i got to hear what he thinks. and an m&a, lack of it perhaps in this case. norfolk southern rejecting canadian pacific's merger proposal. i told you they were going to do this. it wasn't a shock to anyone, but they come back strongly explaining why it will never happen in their opinion. let's get to the jobs report first. showing a better than expected 211,000 jobs added in november.
9:02 am
october payrolls were revised upward to 298,000. that paving the way for many peoples expectation that the fed will hike rates later this month. the november unemployment rate held steady at 5%. hourly earnings just above 1.5%. participation rate also picked up. people like focus that as a negative in the reports, fewer people trying. but it does given how many jobs are being created, people may be attracted back. something yellen has talked about as being a positive. >> i think that this report demonstrates that they were right to wait. there's enough head of steam in here. and the industries they're talking about that did well, that you can feel this is a decent time. people said they missed the window. they missed the window in manufacturing, that's the strong dollar. manufacturing is not doing well. we had -- we will talk about
9:03 am
norfolk southern later, union park had a presentation yesterday, made you say manufacturing is done in this country for now. david, service ism want so good yesterday. service looks good in this. people can get jobs in industries. the increase per hour was down, 4 cents versus 9 cents. a less hot wage number. that's extraordinary given the fact that there's been so many moves to that raise minimum wages around the country. >> it is the increase was less than it was. >> yes. i think if you're the fed, you're saying we fulfilled our mandate of getting job growth going. now we have to front-run inflation by saying we'll start taking a look at -- you'll get raising rates. one thing i would tell you on the inflation front, we're hearing from a lot of companies. and where we're getting inflation is rent and in healthcare. i don't think higher rates will impact healthcare.
9:04 am
rent maybe. >> maybe. maybe. although -- right. asset prices, of course, have gone up a lot as a result of zero interest rates. >> right. you know, you could argue, listen, if we raise rates people go lock in a mortgage. that's good. maybe there will be more building. we need to see more building and we need more affordable housing. that's why i thought any rate increase has made housing a little more affordable on the demand side. of course your rates go up and it costs more per month. >> conceivably. the question is what will it be followed by? 25 and out or more. you say maybe they were right to wait. certainly plenty of people believe june would have been a better time. easy to do that monday morning quarterback. >> we have a lot of deal the interim and buyback. if you look at it from the stock point of view, you will never get a right moment because you never want rates to go up. that's a ridiculous attitude. i was rating for china to be under control. china is pretty good.
9:05 am
everybody hates draghi. give me a break. draghi is data dependent. the data in europe better than in the united states lately. getting good car registrations, sales over there in retail. >> german factory orders in october rose 1.8% month over month. spain actually showing a bit of life. >> italy was good. think about pvh that stock was down 10% yesterday. >> yeah. >> whoa. europe is the strongest market. >> let's talk about the broader market. yesterday was ugly. the day went along, you and i do typically e-mail each other through the day about various stocks we talk about or follow it got uglier and uglier, particularly in energy even with the move up in oil yesterday. watching these names whether it's the transporters of the commodity or the producers of the commodity, gets scary, not to mention they were take out other names, too, biotech,
9:06 am
celgene it was let off to this macro trade, being short the euro, long euro stocks and long some of the bonds, all of which came back to haunt them and the dollar reversing course dramatically when draghi didn't do as much as people thought. it bled into the broader market. >> when people are wrong they pull back. >> they pull back. >> the people we're talking about are not trying to figure out if they want to buy merck versus pfizer. though made giant bets. the cogoldman sachs bet that th will go through the roof. wrong bet. draghi saying things so that we get more negative. didn't help. some give up. others thought the employment number wouldn't be too hot. they take names in biotech. there was a series of
9:07 am
manufacturing dated a that was horrendous. >> ism earlier in the week. >> terrible rail, truck numbers. truck numbers are recession. just recession. the number of truck builds. cutting back construction is not bad in this employment number. that was good. the final thing is this pipeline issue. >> you and i ended yesterday's show talking about kmi, which you said you will do more work on. i brought it up because it is such a widely owned name amongst those people in this environment who have been looking for yield. how many brokers out there have told people who are on fixed incomes or whatever it may be, here an mlp, was an mlp, no longer, but considered part of that group in a sense and that yield and now the question is can they maintain that dividend? stock traded below 20 yesterday. ete, remember the big deal for williams? have you watched ete and wmb, and wpz which williams controls?
9:08 am
this sector is ugly. >> williams has a lot of coverage on that dividend, doesn't seem to matter. there was an acquisition that kinder morgan made. people thought they would sell the piece they owned. instead they bought it why is it controversial? it feeds into chicago, which is a competitive market. we don't want competition pipeline. we want the only pipeline. maybe they could reverse it but it would not reverse to louisiana where you have most of the refineries, reverse to texas and oklahoma seemed to be a dumb acquisition. then it got the rating agencies angry. rating agencies make it harder to borrow. so you have one of the largest infrastructure company just being crushed. >> today we have wti reversing below 40. >> you knew that opec was going to stay the course, because opec is run by saudis. you knew that natural gas, the toll road -- kinder morgan, a toll road. people are not driving on the toll roads so much.
9:09 am
there's less gas being pumped. >> not to mention, if you get companies that go bankrupt, they won't pay the tolls anymore. >> no, they're not. >> or the long-term contracts become null and void conserve bly in conceivably. >> i was going through a statement that rich kinder, the godfather of this industry made last year. basically saying we will be able to grow distributions -- i don't want to say to the sky, decent numbers, but looking back that was the top. and i think people are scrambling here. it's amazing, david. i can't find a large capitalized pipeline company that wants to buy another pipeline company? it's almost as if you would need, honestly, warren buffett, burkeerkshire hathaway picking one of these. >> let's go to steve sedgwick in vienna. he has the latest from the opec
9:10 am
meeting. steve? >> reporter: guys, at the moment we're still citing sources, but this is quite extraordinary. for the 15 years i've been coming down to svienna, the big accusation against opec is it doesn't matter what the number s produce a million, 2 million above it. it appears, according to sources still, they said, yeah, we're producing $31.5 million barrels and now that's our official level. it does not mean, i need to emphasize this to the traders, it does not mean there's an extra barrel of oil going on the table. this is the group admitting that 30 million barrels a day is fallacy, fantasy, it's a joke. we are producing at least 31.5 million barrels a dashy, that's what our official level is. opec is going from 12 members to 13 members, which includes
9:11 am
indonesia. that is another million barrels give or take the change up to 32.5. there are some saying that actually opec is producing way over 31.5. so, it is really laying down the gauntlet to all those who say you should be cutting. that includes members within opec. the venezuelans were saying to me this morning the current policy doesn't show the real influence of opec and is a catastrophe -- that was the words of the venezuelan minister. it's a catastrophe. we want 1.5 million barrels off the table. 5% off the table at a minimum is what we want. now they've admitted they're producing not only 30 million barrels a day, but 31.5 million barrels a day and possibly more. i think it's the gauntlet being laid down. let's face it, what other choice they have? they won't get anyone else going with them if they cuts if saudi cuts, gcc ally also go with them but no one else the will. all the chatter is the russians
9:12 am
and how the russians have time and time again said you'll cut, we're not going with you. we'll be glad to have the market share if you do. back to you guys. >> thank you very much, steve sedgwick joining us from seeian nach vienna. let's get the latest into the shooting rampage in california a few days ago. jane wells joins us now. >> 43 hours ago right now this building was in chaos. 14 people were being murdered, nearly two dozen wounded. their cars are still in the parking lot. the police are supposed to update us today. the fbi is investigating this as a case of suspected terrorism, but it's not officially calling it that. though are still going over the evidence gathered inside the home where syed farook lived with his pakistani wife, tashfeen ma tashfeen malik. there are police photos we have
9:13 am
now of what was found inside the rented suv the two of them were driving when they died in a police shootout. we heard for the first time from the first first responder here, veteran police lieutenant mike madden who said he had to rush past people who were clearly injured because he smelled gunpowder and thought the shooters might still be on scene, but they had just gotten away. >> we went further into the building and that was a difficult choice have to make as well. passing people that we knew were injured, needing assistance. but our goal at that time had to be trying to locate the shooters. there were people who were obviously injured. and obviously in great amounts of pain. that was evident in the moans and wales we were hearing in the room. >> we are learning more about the victims a mother of 3 who fled religious persecution in iran and married a police
9:14 am
officer here. a father of six who coached soccer. a 26-year-old college graduate whose facebook page still bears the colors of the french flag. the 42-year-old manager of a coffee shop in the building. a 31-year-old woman who fled vietnam with her child as a mother for a better life in america. all murdered by a man, many of them worked with. four guns were recovered. it looks like the shooters tried to convert one weapon to fully automatic but failed. the female's gun was altered to hold a larger magazine clip. >> people are terrified. people need home defense weapons. a lot of states have -- carry conceal permits. people are running out trying to get guns because they recognize that the politicians are trying to take guns away from them. >> reporter: we'll see what happens. all four of these guns were purchased legally a few years ago. the two handguns by farook
9:15 am
himself. the two long guns by someone still as yet unknown, at least to us. back to you. >> thank you, jane. jane wells from san bernardino. up next, the latest on norfolk southern's rejection of that takeover offer from canadian pacific. and wlous reaction to the jobs report. we will talk with jason fuhrman, chairman of the president's council of economic advisors. another look at futures. we are looking for a higher open t would seem. i don't know anymore. we have a lot more "squawk on the street" right here from post nine. when you're not confident your company's data is secure, the possibility of a breach can quickly become the only thing you think about. that's where at&t can help. at at&t we monitor our network traffic so we can see things others can't. mitigating risks across your business. leaving you free to focus on what matters most.
9:16 am
anything worth pursuing hard work and a plan. at baird, we approach your wealth management strategy the same way to create a financial plan built to last from generation to generation. we'll listen. we'll talk. we'll plan. baird.
9:17 am
i'm a gas service rep for pg&e in san jose.. as a gas service rep we are basically the ambassador of the company. we make the most contact with the customers on a daily basis. i work hand-in-hand with crews to make sure our gas pipes are safe. my wife and i are both from san jose. my kids and their friends live in this community. every time i go to a customer's house, their children could be friends with my children so it's important to me. one of the most rewarding parts of this job is after you help a customer, seeing a smile on their face. together, we're building a better california.
9:18 am
. norfolk southern rejecting canadian pacific's take overproposal saying the offer is grossly inadequate. norfolk adding it beliefs the transaction would unlikely to be approved by regulators. that's something that i focused on in my reporting on it in the last few weeks since the proposal was first sort of made public, if you will. no surprise here except that it is a long rejection. replete with a lot of different examples as to why they believe this is not in the interest of both share holders from an economic point of view and perhaps even more importantly
9:19 am
why they believe it's got no chance getting through regulators. the stb has to review these deals and decide they would enhance competition and be in the public interest. norfolk believes neither one of those conditions would be met by a canadian pacific deal. cp has also said it would put it in a voting trust. you could get paid fairly soon and it would be sitting there in that trust. the voting trust structure proposed by canadian pacific is unprecedented and likely would not be approved. they go on to say contrary to claims, the voting trust would close prior to final stb approval of the merger, would not protect norfolk southern share holders from regulatory uncertainty. under rules established in 2001 any voting trust would require a public comment period and approval by the stb based on the vote that the trust its is in the public interest. there's no certainty that they
9:20 am
would approve a voting trust. they go on in a separate presentation to talk about the tick tock, the back and forth. interestingly say you told us you wanted to meet, the canadian press said we met. we met two hours later it was in the "wall street journal," then you said you wanted to meet again, wouldn't sign confidentiality agreements. we said, no, we have no interest in meeting you again. this was doa. continues to be. the idea that you get other shareholders in here arguing with norfolk southern, it's a two-year minimum. the ideal that you could come hostile and get activists to move on it is hard to understand given how long it would take. >> totally right. from the rail side this is an incredibly well run company. it has, like many rails, including union pacific, problems with coal. because 38% of the utility fleet
9:21 am
was coal based a year ago. now it's 35%. 3%, people at home say what is that? it's a dramatic decline. but this company is managing it. it's a very well run company. it's maybe the best of the rails. rail companies happen to be very well run to be with. what the heck is canadian pacific thinking about? the only people who benefit from this are a couple share holders in canadian pacific if they can steal norfolk southern. it would be great for our government to come out and say remember the potash bid? no. >> when the canadians came out and said no. >> no, we're not letting this happen. u.s. government, just stop this deal. >> the likelihood is high they're not going to be able go anywhere. if there were shareholder pressure you would have to be in there for so long committing to the pressure and make the commitment as a shareholder, you would be there for years to watch it to fruition. hard to imagine.
9:22 am
shares were up, now down. some people were banking that there would be a conversation that took place about trying to get something done. >> i own norfolk southern because it's a good company, that happens to be right now temporarily stymied by a strong dollar and by the decline in coal, which will not get better. they will fix it. that's what they do. they always surprise to the upside. >> all right. up next, jim's mad dash as we count down to the opening bell. let's give you another look at crude. importantly it has fallen below $40. we'll keep a close eye on those energy and energy related equities this morning which have been pummelled regardless of which way the commodity has been moving over the course of the week. more "squawk on the street" straight ahead. here at td ameritrade, they love innovating.
9:23 am
and apparently, they also love stickers. what's up with these things, victor? we decided to give ourselves stickers for each feature we release. we read about 10,000 suggestions a week to create features that as traders we'd want to use, like social signals, a tool that uses social media to help with research. 10,000 suggestions. who reads all those? he does. for all the confidence you need. td ameritrade. you got this.
9:24 am
9:25 am
it is friday. always nice to say that. time for a mad dash. we have ulta on the docket. >> i don't know the last time you have been to an ulta. they are buzzing with excitement and buzzing with comparable store sales. 12.8%. this is the best retailer in terms of comparable store sales. an incredible omni channel business. they are out-amazoning amazon. a beauty parlor will not be affected by amazon. there's a tremendous racetrack to get to the back where the beauty parlor s where you guy cosmetics. they're doing strongly there. 800 stores -- going to be 1,000 stores soon. national ad campaign that worked. 17 million loyalty members. this company is humming. mary dillon is fantastic. >> what is the multiple on this
9:26 am
stock? >> 34. >> 34. >> that doesn't bother you? >> you have to pay up for this kind of growth. and look at pvh. the multiple is, i don't know, let's call it 9. it's not in control of its destiny. this, the weather doesn't matter. there's no inventory issues. they don't -- they have so much room around the country to grow. there is just literally green field in front of them. that's why people pay that high multiple. if you really want consistent growth, go for kroger which is a monster quarter. monster. but this number, david, this conference call, pillars of strength and wisdom. it's a business school clinic! it's belichick! >> all right. wearing a hoodie. opening bell a few minutes away followed by white house economic adviser jason fuhrman, talking about today's jobs report, up 211,000.
9:27 am
my name is rene guerrero. i'm a senior field technician for pg&e here in san jose. pg&e is using new technology to improve our system, replacing pipelines throughout the city of san jose, to provide safe and reliable services. raising a family here in the city of san jose has been a wonderful experience. my oldest son now works for pg&e. when i do get a chance, an opportunity to work with him, it's always a pleasure. i love my job and i care about the work i do. i know how hard our crews work for our customers. i want them to know that they do have a safe and reliable system. together, we're building a better california.
9:28 am
i'i like to think of myself as more of a control... enthusiast. mmm, a perfect 177-degrees. and that's why this road warrior rents from national. i can bypass the counter and go straight to my car. and i don't have to talk to any humans, unless i want to. and i don't. and national lets me choose any car in the aisle. control. it's so, what's the word?... sexy. go national. go like a pro.
9:29 am
9:30 am
all right. the applause building as we await the opening bell for this friday. looking back at the realtime exchange at hq. as we get started here at the big board for the last trading day of the week. ringing the opening bell, the rising rate etf. that may be appropriate. appropriate. rising rate. not the rising sun. rising rate. at the nasdaq, the american ballet theater highlighting it's annual production of "the nutcracker." did you used to take your girls there? i bet you did. >> every year. one year my cousin went. >> is there an aaron rodgers etf coming out? last night did a good job. shouldn't there be an etf for what happens? a short cleveland browns etf. >> i fully endorse that.
9:31 am
etf for individual stocks. >> you're right. amarillo and gopro. >> you know how many hedge funds trade the etfs every day? dual stock etf. >> should be an etf for every sport. everything. >> you and i, should be an etf. >> faber cramer etf. that's the short. cramer faber the long. >> not sure if we're rising or sinking. talking about rising or sinking, let's look at the broader markets. we get a strong jobs number, 211,000. october revised upward that was a big number. almost 300,000 jobs in october. >> i tell you, that makes me -- >> average over the last three months, 218,000. and of course the overwhelming consensus is that we get a december increase in fed funds rate by 25 basis points. if we got a cold snap, we would
9:32 am
be buying retail stocks today. critical downgrade of macy's which was brutal. >> i did. >> can i go back over opec? >> yes. >> oil is not at 35. can we just accept the fact that exactly what happened is exactly what happened? yesterday was a short squeeze. david, we were talking during the break. norfolk southern, people were so wrong. people at home, listen to me. the investment class, the people -- the big hedge fund managers, they're no smarter than you. they don't know more than you. they make a huge number of mistakes. they were wrong to buy norfolk southern. they were wrong to cover oil yesterday. they were wrong to be able to bet against the dollar -- bet that the dollar would be strong and the euro weak. they're wrong all the time. i have to tell you, we attribute some of these people that we see on air, great gifts. >> more of the ones who we don't see by making themselves scarce, we believe that somehow they --
9:33 am
>> these are not stefan curry. >> there's only so many stars. >> there's a lot of kobes out there. i worship kobe. kobe came to philadelphia the other day, and the sixers won a game. sun sets, too we tend to think, wait a second, norfolk southern, that's shocking. no, it's shocking it went to where it was, given the fact i sat next to you and you said that shouldn't be where it is! that makes no sense! let's stop attributing genius and say guys made a lot of wrong moves. if these people who made these decisions were head coaches in the real world, the nfl, let me tell you, they'd be fired. you know what? they are who their record is, which is awful! >> it's interesting you mention that as we come to the end of the year this was a year in which stock picking was supposed to be in the fore, given the broader market has not moved much. it will be very interesting to see the performance of various hedge funds, the managers of
9:34 am
which make untold sums of money. they will always tell you the returns are risk adjusted. you need to risk adjust my returns. that said, it's an interesting time for that industry that being the broader hedge fund industry. 3 trillion in assets. we'll see whether there's a shakeout. i always argued marketing above -- marketing above all else seems to be the greatest single benefit or the greatest single skill that they need to have. >> yes. >> marketing. >> i think that's right. >> were you not a good marketer. >> i wasn't. you had to be nominated to get into my fund. i know an investor who would no dominate you. i didn't hate my clients, but i hated the process. my late father was a salesperson. i wanted people to say you got a
9:35 am
good record. if you want to come in, get to know someone in already. >> i want to get to jason fuhrman in a moment, discuss the jobs report before we go you mentioned oil. i'm looking at this group of names that we've been following closely, pipeline related companies. ete down another 3%. williams down 2%. kinder morgan we talked about. crude around the $40 level. kinder morgan down to 18.50. the mmlp index is also down. kmi's yield is -- what is it? 11%. >> this is one, again, that last acquisition was too far, i believe. i don't like what they did. >> i see an 11% yield, don't i have to say, okay, even if they cut the dividend or no? >> these -- when mlp, this is not an mlp, but when an mlp cuts dividend, it tends to go down
9:36 am
60%. some of these are factoring in the decline. many of these companies have coverage and are being brought down etf-like. if somebody -- a large one, transcanada, these companies, were to go and buy one of these companies, or berkshire hathaway were to buy one of these companies and take it out of that realm it would change the face of things. if rich kinder were to come on and explain why he did the last deal that would matter. right now, it is gripped with a level of fear that i have not seen in many, many years. now, debt downgrades, you taught me a lot about credit. financial times with a story here, corporate debt downgrades reached 1 trillion. defaults rise to post-crisis highs, but a lot of that is oil. >> let's get back to the jobs report. the labor department reporting that 211,000 jobs were added in the month of november. the unemployment rate staying at
9:37 am
5%. joining us for the first reaction from the obama administration, chair of the white house council of economic. i have to believe you're pleased with the average of 218,000 jobs over the last three months. can we keep it up. >> i'm very pleased with what we're seeing. 69 straight months of private sector job growth. and i think we have a lot of potential in our economy. consumers are optimistic. we've seen increase household formation which is good for residential. we are seeing challenges from the rest of the world, but there's a lot of reasons we make the right choices on things like the budget over the next week that we could be in good position for next year. >> jason there is concern about the manufacturing economy. i know you can't talk or won't discuss rates or the dollar, the stronger dollar, albeit weaker
9:38 am
yesterday, that been pressuring manufacturing. how concerned is the administration about that and some are calling it a recession in america's manufacturing belt? >> we've still added manufacturing jobs over the last year. that -- we spent a decade where year after year we lost jobs. but we're not adding them at anything like the rate we were before that. the single biggest determinant of america's exports is how much the rest of the world is growing. and that's why until we see more growth from places like china we'll have a hard time having the type of exports we want. that's going to create a challenge for that sector of our economy. >> jason, jim cramer, congratulations on good numbers. sometimes good is good, we like to point that out. you have a lot of part-time workers in the country. the affordable care act right now some would say favors the creation of part-time jobs, because of some of the issues
9:39 am
from united health saying it's too expensive to write these policies. anything we can do to treat affordable care act to make it so some of these part-time people who clearly want to be full time can be made full time? >> look, since the affordable care act was passed, all the jobs we've added have been full-time jobs. in the last year the percentage of people working part-time for economic reasons has fallen quite sharply. and when the american enterprise institute looked at this question, they said there wasn't evidence that you're seeing a big increase in part-time because of the affordable care act. so i tend to look at affordable care act and thinking it's slowing the growth of health costs, and that's helping employment and helping our economy, that's the dominant story we have. >> just not to be -- declare my politics here, i want people to get good healthcare. i'm concerned. i think we all have to be concerned about that united healthcare announcement which said we don't want to write these policies.
9:40 am
they're too expensive and there are part-time people who do want full-time jobs. there are employers who are reluctant to do that. my bias here is to have people have more full-time jobs, not be american enterprise institute or right or left. i think you share that with me. are there some things that can be done to make sure there are more people who write insurance that would bring down the cost of healthcare? something that i think even the left and right would like to see. >> yeah. absolutely. we're pushing forward with delivery system reforms, pushing forward for alternative payment model models, better coordination of care rather than duplication and fee for service. when we do things like that in medicare, you see the private sector follow t brings down costs, it makes it easier for employers and workers. the solution for all of this is slowing the growth of system-wide health cost,
9:41 am
improving health quality and coming at it that way. that's our approach. >> jason, given we have you on very often we talk about infrastructure, the administration's goal to get a big infrastructure bill or something along the lines of spending we need. there's a highway bill working its way through. what is your view on it and what it will do in terms of addressing the infrastructure needs? >> it passed both houses of congress last night. the president looks forward to signing that bill today. it's a good first step. it provides several years of funding, above the current levels, it makes some reforms, it's going give some of the predictability and consistency that we need. we're pleased with it. doesn't come to the level of funding that the president called for. we think more still needs to be done. but we're pleased with this step. >> jason furman, appreciate you taking the time to join us. >> thanks for having me. >> jason furman from president obama's council of economic
9:42 am
advisers. >> look, this is a number that a lot of people are surprised by because we did not get the big downturn in industrial manufacturing. some of that could. >> no doubt, like you said, the first and mothforemost thing on traders mind, traders say the opec meeting, those headlines
9:43 am
coming out will have more of an impact on the markets than the jobs number was. though it was a decent-sized number. it doesn't make up for the other parts of the economy that may not be performing well. still, if you look at what's happening with yields. that's a huge focus for stock traders today. at the end of september, early october, two-year note yields were 60 basis points. now they're pushing close to 1% at one point during the day. you can see we backed off that level. ten-year yields, same situation. we're watching what's happening there. as you play this whole scenario out, interest rates, one side of the equation. oil prices, we have to look at that as well. that's going to be a huge factor for what will be driving this trade today. wti crude right now back above $40 it did dip below the $40 mark earlier. $40.22 that puts a lot of the oil companies, that sector, the
9:44 am
nr energy sector overall in focus. the names in focus, drillers, natural gas stocks. you look at chesapeake, diamond offshore, chevron and exxon, much more weakness than the market. that's a downside move. as we look at the sectors overall, the real gainers have been -- luke you look at utiltid financials. energy the laggard there. on the financial side of things. as you look at some of the regional banks that may benefit as perhaps the specter of rising interest rates happens, we know that rates are moving more to the down side off the highs, still, pnc bank, fifth third, keycorp, regions financial, some of these larger financial banks will be a focus because they will be talked about during the idea of a fed maybe going forward with that interest rate hike in a couple weeks. david, as we talk about what's
9:45 am
going on overall with the market, yes, we're not even factoring in the big move yesterday for the euro and a down move for the dollar and the european central bank's comment about we got it all wrong, all of that factoring in. >> that macro trade was the big story yesterday. leading into the broader market in a big way. let's get to fixed income and for that we head to the bond pits and rick santelli at the cme group in chicago. rick? >> good morning, david. happy employment friday. you know.c, dom said something when people say it sh, people cringe here, the market got it wrong. we are still responding to much of the volatility yesterday. some of it caused erroneously by an early ft release that wasn't adequate in describing what ecb
9:46 am
and mario dragedy goohi did. a lot of people want to talk flattening, yesterday, there was boat load of flattening, but this morning it's steepening. let's look at a two-day of two-year note yields, closely in line with the fed. failure to hit 100 basis points yesterday. failure to hit 100 basis points today and coming back off. look at the tens, same dynamic. it's coming back off and it's interesting that 235 was the high yield. virtually the high yield yesterday as you see on that chart that was a high yield and the high watermark after last month's employment report. maybe bunds are more important. look twoat the two day of bunds. the elevated trend of rates, pushing back to qe, pushing back that they want more investors out of the ecb, more crisis-type policy even though nobody talks
9:47 am
about a crisis anymore. look at the two-day of dax. we want to continue to monitor that. there's been a lot of u-turns, but still like our market hasn't gotten yesterday back entirely. foreign exchange, two-day dollar index t looked like they would get back a third of what they lost yesterday. not to be. seeing a positive market, but not nearly with the breadth or girth it had after the 8:30 data. david, back to you. >> thank you very much, rick. amazing, the bund at 0.68% for ten years. we have an s&p up almost 1 percentage point. >> could there be a squeeze in the kmis with this -- >> kinder morgan just watching that. >> the money coming into the market. there could be a squeeze up. they can continue to weigh on in but if kmi were to come out and say we're addressing this -- >> you and i have been focused on this this morning. for good reason. down another 6%. >> the market is so strong. there's an air of good feeling,
9:48 am
somebody comes out with something. i feel the short trade is not such a smart trade right now on kmi. >> going from talking about a company that transports the commodity to the commodity itself, let's check in with jackie deangelis on oil. >> reporter: no production cut from opec. that's putting pressure on oil prices today. intraday low 39.60, but we are back above $40 a befoarrel righ now. what was interesting is that the cartel did up its quota from 30 million barrels a day to 31.5 million barrels. most people out there were already assuming the cartel was producing more than that. this is an attempt to legitim e legitimatize that. the preview consensus is they had no choice. the saudi arabias of the world
9:49 am
are flexing their muscles within the group. but there is a lot of in-fighting, that's something to think about. this inaction is not necessarily seen as a powerplay. it's seen as a cartel has had hands tied and no other option. in some ways opec does look like it's losing power here. the bottom line is more oversupply, more of a glut, more pressure on prices. this time traders think we can break this $40 mark with some conviction. back to you, david. >> thank you very much, jackie deangelis. still to come, more reaction to the jobs report. we'll speak with jan hatzius as we often do after the numbers come out. and deere is battling a slump in farm machinery. an exclusive interview with ceo sam allen in the next hour.
9:50 am
every year, the amount of data your enterprise uses goes up. smart devices are up. cloud is up. analytics is up. seems like everything is up except your budget. introducing comcast business enterprise solutions. with a different kind of network that delivers the bandwidth you need without the high cost. because you can't build the business of tomorrow on the network of yesterday.
9:51 am
and then santa's workers zapped it right to our house. because you can't build the business of tomorrow and that's how they got it here. cool. the magic of the season is here at the lexus december to remember sales event. this is the pursuit of perfection.
9:52 am
strong opening here for the broader market after a very poor day, if you're long the market
9:53 am
yesterday. the s&p now a 1% gain. we'll be generous. you can see the nasdaq also, the strongest performer year to date, also up almost 1% with the dow ahead more. up next, stop trading with jim. other wireless carriers make families share data. some way to say happy holidays.
9:54 am
switch to t-mobile now and get up to 4 lines with up to 6gb each. just $30 bucks a line, that's 6gb each plus unlimited video streaming with binge on™. stream netlfix, hbo now , hulu and more without using your data. and now unwrap the samsung galaxy s6 for $0 upfront and just $10 bucks a month. this year tear into the holidays with t-mobile.
9:55 am
9:56 am
time for stop trading. >> so much i want to talk about, macy's didn't go down on the downgrade. retailers are roaring. i want to thank on gopro and ambarella. ambarella is the drone company. they took great papers to separate themselves from gopro, people initially weren't buying it. ambarella was down 5 in the after market but they're starting to buy it, maybe gopro is not ambarella, maybe break that etf and ambarella is a thrown company, and the taser company. >> what's on "mad" tonight. i think rich kinder should come on with you tonight.
9:57 am
>> i would like him to. if oil doesn't rally, that -- >> other than that possibility, what's going on tonight? >> zoe's kitchen, it's worked in restaurants. kevin miles is a great restaurant tur. and bill doyle, i mentioned novacure, just another biotech, sometimes they watch the show and say i'm worth more than that. >> have a good weekend. >> i'm going binge! the wife is away. "homeland" i better not say the other ones. then she says i didn't see that. >> keep it to binging on tv.
9:58 am
♪ approaching medicare eligibility? you may think you can put off checking out your medicare options until you're sixty-five, but now is a good time to get the ball rolling. keep in mind, medicare only covers about eighty percent of part b medical costs. the rest is up to you. that's where aarp medicare supplement insurance plans insured by unitedhealthcare insurance company come in. like all standardized medicare supplement insurance plans,
9:59 am
they could help pay some of what medicare doesn't, saving you in out-of-pocket medical costs. you've learned that taking informed steps along the way really makes a difference later. that's what it means to go long™. call now and request this free decision guide. it's full of information on medicare and the range of aarp medicare supplement plans to choose from based on your needs and budget. all plans like these let you choose any doctor or hospital that accepts medicare patients, and there are no network restrictions. unitedhealthcare insurance company has over thirty years experience and the commitment to roll along with you, keeping you on course. so call now and discover how an aarp medicare supplement plan could go long™ for you. these are the only medicare supplement insurance plans endorsed by aarp, an organization serving the needs of people 50 and over for generations. plus, nine out of ten plan members surveyed
10:00 am
say they would recommend their plan to a friend. remember, medicare doesn't cover everything. the rest is up to you. call now, request your free decision guide and start gathering the information you need to help you keep rolling with confidence. go long™. ♪ . good morning, welcome back to "squawk on the street," i'm david faber along with sara eisen and simon hobbs. we are live from post nine.
10:01 am
carl has the day off today. markets are up nicely after a strong jobs report for the month of november. our market action today follows a particularly strong down day for the broader averages yesterday. as you can see, oil is slumping, once again below $40 a barrel. >> a big morning on cnbc. the jobs number comes in better than expected. making a rate hike in two weeks all but certain. with the dow up 176 points, is it already baked into the markets. >> goldman sachs chief economist, jan hatzius will join us live with his first reaction. >> and are coffee snobs the secret to starbucks success? jim stewart thinks so. he will join us live at post nine to talk about that. >> also coming up later on the show, the chairman and ceo of deere, sam allen, will join us live for an exclusive interview in a few minutes.
10:02 am
a lot to talk about with him. >> let's kick off with the jobs figure. the u.s. adding 211,000 jobs in november beating expectations and last month revised up to a gain of almost 300,000. steve liesman is back at hq with a bumper set of figures. >> yeah. simon, that means you can't relax. better than expected jobs report followed by upwards revisions the past two months has some economists thinking not about this december rate hike but time for folks to start thinking about when the next rate hike will come. the first out of box with the prediction, we think this prediction locks the fed into a rate hike on december 16th and we expect a second increase at march fomc meeting. this is how the conversation changed from today. here are the numbers. nonfarm payrolls up better than expected, 211. september and october revised up to 35,000. the three-month average is
10:03 am
218,000. you did 298 in october. average hourly earnings owe okay. 0.2%. unemployment rate unchanged at 5%. and the labor force participation up to 62.5. better housing construction out there. leisure hospitality strong and retail strong again. we thought that made october brought forward some holiday season hiring, with the 40,000 gain, but now strong again at 31,000. temporary help services, down 12,000. mining down 11,000. you can see how the u.s. economy is able to overcome what's happening in the oil patch. this report was probably stronger than the headline number implies. there was some weak numbers in motion picture and auto numbers.
10:04 am
the labor force has grown by 500,000 workers in the past two months. this potentially backs up janet yellen's talk yesterday that there was considerable market slack for more gradual rate hikes in the months ahead. markets around the globe will watch intently a speech in new york this afternoon from the europe european central bank president, mario draghi. after so disappointing markets yesterday with his new easing plan, can he redirect? does he want to? draghi faced strong internal opposition. the market's take away was what you see is what you get. so no further easing can be forthcoming from the ecb. i have my doubt s he can rediret markets after yesterday. okay. let's look at where we are in the markets. last night in the wake of the
10:05 am
ecb and everything that went on, we lost about 250 points on the dow. we clearly reversed that on this strong jobs figure. to each of you, please before we dive to the knee jerk reaction of what this means for the fed and interest rate hikes, can we focus on what this means for the economy itself? the fact that we've had such strong growth last month, and the revisions to the month before. lindsay, is this economy now speeding up. >> i think it's fair to say we're still in a moderate patch. we saw strength in october and november, but that comes against the back drop of weakness in august and september. the direction of the labor market is unclear. there were some red flags in the morning report. we saw service hiring drop to a multi month low. average hourly earnings, the average annual pay dropped back down to the 2% tread line.
10:06 am
again, there is still some wiggle room around whether or not we are gaining momentum or losing momentum at this point. i think moderate is a very accurate assessment of where we are. >> david, would you agree? the average over the last 11 months is 209,000 jobs created each month. that seems quite strong to me. >> yeah. i still think it is moderate relative to the long-term u.s. history. but this is about owl we can do at this stage. to me, the interesting part about this report is even with the growth and labor force that steve mentioned, labor force has grown at an average rate of 75,000 workers per month over the last year. and job growth is more than twice that. so we are still seeing a tightening labor market and this is only moderate growth, but even so the economy is moving towards overheating gradually. because of that, yes, the fed moves december, but also march,
10:07 am
june, next year. don't know if it's wise to make what fomc members make when trying to influence a market. bullard suggesting it may be a weak report, was suggesting 200,000 a month was unsustainable. 125,000 a month would be sufficient. so if they're coming in above 200,000, david, as steve suggests, we now come into this suggestion of how fast they will hike and will it be at a gradual level. >> i think they'll start out gradual. i would be astonished if they moved in january, after moving in december. march, june, but at that stage
10:08 am
they have do reassessment. if we continue to get 200,000 jobs per month, i think the unemployment rate will go down past 4.8% next year. we could go below that mid year. at that point people may start betting on a slightly faster pace of increase. they will start off gradual. the question is whether they can stick with that. >> you're focusing on the labor market alone. while the labor market improvement may be enough to justify liftoff by the committee, going forward the gradual pace or the accelerated pace of rate increases will depend on the total mandate of the fed, not just one component. we're going to have to see that inflation component increase back towards that 2% objective in order to justify further rate increases from here. even if we do maintain a 200,000 or 211,000 pace in terms of monthly payroll gains. the fed will have a difficult time justifying the rate
10:09 am
increase. >> lindsay -- as they pointed out, inflation being what inflation is, once the falls in commodity prices fall out of the series, doesn't the inflation rate become more stable at any rate? that's just a question of the calendar. >> that's just pure math, you'll see reversal of inflation. what if inflation is sluggishly slow through the end of 2016, can the fed justify sequential rate hikes if oil is below $40 and inflation is up only a few tenth of a percentage point. >> the point i was going bring up was the broader context of the economic data. clearly the jobs report was most important this morning, we learned that the trade deficit widened and exports dropped to a level we haven't seen in four
10:10 am
years. if you put that next to the manufacturing number earlier this week, disappointing. still a lumpy read on consumer confidence and spending. how do you square such a strong employment report with all of these sluggish other data points? >> i think in the economic data, the trade manufacturing, housing sectors tend to be overemphasized. the service sector, we don't get as many readings on them. i think the service sector is doing much better. that's why the economy is doing better. to lindsay's point, we will get mixed signals over the year ahead. mixed signals might justify a neutral monetary policy, but we are so far from neutral, if you start from an emergency level of zero, i think that mixed signals justifies a gradual move back up towards normality. i expect the federal reserve will see that as the year progresses. >> still hanging in the air what it means for earnings and the stock market. we'll talk about that later in the hour.
10:11 am
thank you. >> thank you. the investigation continues today into the mass shooting in san bernardino, california. let's get the latest from jab well wells live on the ground. >> they're keeping this building behind me closed. this is where the massacre took place just 44 hours ago. they are not yet officially calling it terrorism, but the fbi is investigating this as a case of suspected terrorism. as we show you the one suspect we do have a picture of, syed farook. we know he made a couple trips to the middle east in the last few years, including saudi arabia. he returned the last trip in july of 2014, with tashfeen malik. we know his brother served on the universal war on terror. his mother described his father as an abusive alcoholic. we don't know a lot about his
10:12 am
wife. as we show you video of what it looked like here just two days ago. tashfeen malik, who is this 27-year-old woman or who was she? pakistani officials are now helping in the investigation to try and fill in the blanks as we show you photos the police have released of what they found at the suv where the two were killed in a shootout, farook's brother-in-law says he was not radicalized. >> he was a good, religious person as normal as anyone would be. but nothing -- nothing that i can see that he could do. >> as we show you pictures now of the victims, we have learned the names of the victims. farook and malik murdered people who were mothers and fathers. they, too, themselves were parents. they had a 6-month-old baby daughter that they leave behind.
10:13 am
farook's brother-in-law says he plans to try to adopt the girl who remains in protective custody. back to you. >> some answers, i guess, still a lot of questions. jane wells reporting live in san bernardino. when we come back, an exclusive interview with the ceo of deere. we'll get his take on the federal reserve, rates and jobs, and what he thinks about american competitiveness. st
10:14 am
my name is peter tran. i'm a gas service representative. i've been with pg&e nine years. as an employee of pg&e you always put your best foot forward to provide reliable and safe service and be able to help the community. we always have the safety of our customers and the community in mind. my family is in oakland, my wife's family is in oakland so this is home to us. being able to work in the community that i grew up in, customers feel like friends, neighbors and it makes it a little bit more special.
10:15 am
together, we're building a better california. . welcome back to "squawk on
10:16 am
the street." patrick harker is making his first comments on the economy and monetary policy and he says he would prefer rate hikes sooner rather than later. those are his first comments out of the box. he suggests an earlier rate hike would allow for a further path of gradual rate hikes. he expects steady and modest growth going forward. the question is harker who comes from academia, not necessarily economics, he was a dean from the university of delaware, would he be quite as hawkish as his predecessor. we don't know for sure, but he's on the hawkish side suggesting that he wants rate hikes sooner rather than later. that is sort of the center of the committee right now. >> yeah. as janet yellen said, those centers will be ignored. the big jobs numbers strengthening expectations that the fed will raise rates in less than two weeks despite parts of the economy clearly struggling.
10:17 am
manufacturing contracting at the fastest pace since the last recession according to data this week. we welcome same allen, ceo of deere, the world's largest maker of tractors and harvesting combines. he joins us from d.c. where he chaired a meeting on the council of competitiveness. welcome. >> thank you. >> we'll talk about the work of the council in a moment. great to have a voice on from manufacturing, from the heartland and midwest. you're struggling with crop prices that are severely depressed. what are you seeing with the world? >> certainly we're challenged as you indicate. crop prices are down. as a result we have had to lower production. and that unfortunately right now seems to be more of a global situation. we're seeing that in all markets. south america as well. europe as well. china and india are the same
10:18 am
thing. we are having to adjust moving production schedules down, and lowering our capacity in order to make sure that we're still efficient at what's probably going to be a challenging period of time for us. >> how do you react to what is clearly the headline this morning that the fed is now highly likely to raise interest rates on the 16th and the commentary, even though we get manufacturing data, look, manufacturing is a relatively small part of the economy, affected by the strong dollar. you're facing a structural problem. you have the worst market in 15 years for what you do. what do you think about an interest rate rise in that environment? does it matter? >> well, it does matter. i'm also one that believes they do need to raise the rate. i'm more concerned about the guidance they get after raising the rate. i think the market has been expecting a rate increase for a
10:19 am
long period of time. to not raise rates puts additional uncertainty in it. obviously as you indicated, raising rates has an impact on the strong dollar, which is having an impact on our business, our export business. at that point in time it doesn't make sense to keep delaying and delaying and delaying. i would rather see a rate increase followed by commentary that gives indication of the more medium to longer term direction that the fed plans to take. >> sam, we were talking last year at this very event about some of the problems that your business is facing. sounds like we're having a similar conversation. how long do you see this agricultural downturn lasting? >> this will be -- based on the guidance we just gave for 2016, which would be down another 6% for the company, this will be the third year of downturn that we will have experienced. we only had that seven, eight times during the history of the
10:20 am
company. so, you know, if history plays out it will not last much longer. we normally don't have it last more than three years. but it all will depend on what happens both with crop prices and as well as the overall economy. i'm hopeful to reverse this trend going forward. >> let me ask you about the council on competitiveness which you chaired in d.c. a couple of takeaways in your words, we need to wake up and tackle immigration. also calling for a doubling in the investment in federal research. at the moment it's unfashionable to believe that the federal government can fix anything, or that politicians or civil servant tooshould be allowed to pick winners. >> what we're able to say and what council says effectively,s that something that no one company can do.
10:21 am
i happen to also agree that the federal government shouldn't pick winners and losers. but the federal government should do things that any one company or any one individual in private society cannot do. basic research is so cost prohibitive for any one company to do. and it has been a critical enabler of a lot of companies innovating and growing overtime. >> what are we talking about, sam? what specifically do you want them to double the research in? >> in the national labs, whether it is in basic research as it relates to metals, basic research as it relates to nano technology, super computing. a number of areas like that? they almost are all associated with our national labs in conjunction with some universities, which the council brings both of those together. there's a coordination to do this type of research that then enables companies to invent,
10:22 am
whether it's materials, whether it's the products, that allows us to be competitive in the global market and continue to grow. >> who is your biggest threat? where is it coming from in terms of countries? >> i'm sorry? >> when you talk about our nation's competitiveness and how we can be doing more, companies also talk about our tax rate being the highest who would you consider your biggest threat? is it the chinese firms? >> deere has a number of different businesses it does vary by business. there's no doubt that the chinese are a significant, significant competitor. if we look out on the horizon 5, 10 years down the road we expect they will be a bigger competitor. in the near-term they would not be our biggest threat. if you're someone that has an eye towards the future, if you look out f you're in business, you look out 5, 10 years, you know they're one of the key players you will compete with.
10:23 am
>> just to square that circle, sam, just to come back on the main call for doubling of federal research, you are talking about two different things here. presumably the chinese are not engaged, i assume, at that very, very high level with mass research at the level that might be done in labs here. the impression is that they steal what they want from other people. have i got that wrong? >> no. one thing we're all the trying to do is get everybody, not just the chinese, but all countries, everybody into a global set of regulations through world trade organizations, things like that treaties that everybody plays by the same set of rules. that clearly is not the case today. some countries do not take intellectual property at face
10:24 am
failure. going forward that's something that we will all work towards trying to change. to your question at this point in time, we have a number of operations in china we have to be cautious about the intellectual property we bring over to those operations for that very reason. >> it's good talking to you, mr. allen. hope to see you soon. >> thank you very much. >> sam allen, ceo of deere joining us from d.c. the market is up. dow up 210. crude oil is falling sharply. in the u.s., wti slips below $40 a barrel. a life report from the opec meeting in vienna after the break.
10:25 am
10:26 am
10:27 am
oil falling as we move past the opec meeting. steve sedgwick is live in vienna with the latest. always some hawkish talk. was there a chance that they do something? >> well, for starts, simon, i heard some of that hawkish talk
10:28 am
from venezuela. delpino said it is a catastrophe unless we cut by 1.5 million barrels. i don't think we necessarily got the full story. around an hour and a half ago some very good journalists i know in the wires thought they had the scoop on this. that opec was raising, admitting that actually it produces at 31.5 million and raising the official production level from 30 to 31.5 million and questions about whether that included indonesia or not which rejoined opec. i have to say to people be careful on the trades you're putting on at the moment because we should be finished by now. a lot of journalists should be writing up their copy, getting on their planes back to where they live. at the moment all the opec ministers are still in the meeting. if we knew what was going on this is unheard of. i've been coming to opec for well over a decade to get what
10:29 am
we thought were the official flashes from good sources from reuters and others, and for people to be sitting waiting for an hour and a half, i would be careful if i was trading this today. we knows there a big short built up. they'd be happy about having the price movement we've seen on an apparent rollover stroke admittance of what they're producing at 31.5 million barrels a day. whether or not that includes indonesia could be key. we're awaiting information at the moment. there's a lot of nervous journalists. back to you. >> thank you very much for the update. we're watching the price of oil trading sharply lower right now. below $40 a barrel. jackie. >> we did see another price dip under this $40 a barrel. we will probably teeter here throughout the session. the question is was this a power play by opec or in some ways an act of desperation by a cartel whose hands at this point are tied? consensus leaning towards the
10:30 am
latter. steve mentioned this up in the quota, traders are telling me they're not surprised about it. analysts were estimating opec is producing more than 31.5 million barrels a day. with or without indonesia, we know supply is going up, it will contribute to this gut that's out there. what this is interpreted as is an act of legitimatizatiolegiti. it appears stronger members are flexing their muscles and are winning. the bottom line, more oil, bigger glut, fractured cartel. wti only trade under 40 for a significant period of time during the financial crisis. since then we have had these short-term blips, but this could be the push that takes us lower and holds us there. back to you. >> thank you very much. the dow is now up 218 poi s
10:31 am
points. ahead on the show, jan hatzius will join us at post nine with his reaction to the jobs number. i'm here at the td ameritrade trader offices. ahh... steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this.
10:32 am
10:33 am
good morning, i'm sue her a herera. secretary of state john kerry meeting with with the greek prime minister telling him the u.s. wants to help resubmerge from the economic crisis.
10:34 am
he later said it may be possible to get the syrian forces and government to coordinate forces against isis. a firebomb attack on a small nightclub in cairo killed 16 people and injured three others. police are looking for two young men who carried out the attack allegedly after they were denied entry. the cafe in paris where five people were killed by isis extremists last month has reopened. it's been piled high with flowers since the november 13th attacks which left 130 people dead. back home, scott weiland, frontman of the stone temple pilots has died. he was found dead in his sleep in minnesota. he was only 48. that's the cnbc news update for this hour. back to you. let's get back to the top story, today's all important
10:35 am
jobs report. 211,000 jobs added in the month of november. unemployment rate holding steady at 5%. will this bolster the case of finally raising interest rates and can we price in the second one? joining us is jan hatzius. good to see you. >> nice to be here. this was better than consensus number. seals the deal for december. but when do we start pricing in march? >> i mean, i think march should be priced higher than it is. i don't think it's a done deal. my expectation is they do go in march. at what point that happens, you know, the meeting would be sort of an obvious point for it if she sends a message that they are more likely than not to go in march. i think that will be the message that will be sent. >> in terms of the messaging, there's an idea in the market that we will see a dovish hike. in other words, they'll hike rates but markets will be okay because she'll say we'll be
10:36 am
cautious from there. is that unrealistic? >> i don't disagree with that. they will want to make liftoff as palatable as possible, but there's a limit because they don't want to box themselves in too much in terms of what they can do subsequently. the expectation is going to be they're going to go something like once a quarter. >> before we leave today's jobs report specifically, were you concerned that we saw wage growth cool off in this number. >> we weren't surprised by it because the last number was quite strong at 0.4. also other indicators of wage growth have looked better. there was an upward revision to compensation numbers earlier in the week. when we look at all the indicators together there is a little more evidence, we think, that you are getting some acceleration. >> are we allowed to celebrate this? can we say, hey, that's great. it's 211,000 jobs created last month, almost 300,000 jobs created the month before. this economy is doing well. this should be good for revenue and stocks.
10:37 am
are we allowed to do that? do we have to go immediately into this, oh, my god, interest rates will kill us. what's the reaction function there? >> it's good news. the last two jobs reports have been good news for the economy. at the margin that's also good news for the financial markets. it's more mixed because there are more factors in the -- in the bond market, it goes the other way. in the stock market lots of other factors like, for example, profit margins and interest rates. >> am i able to say, as people watch this around the world, the biggest generator of growth or the largest economy is beginning to accelerate again? can i say that? >> i'm not sure it's accelerati accelerating. i think what's happened is that there were a couple reports that looked quite a bit weaker, there were worries about a sharper slowdown. those worries we can basically put aside. we're not looking for an acceleration in growth. but the amount of jobs that
10:38 am
we're adding every months looks respectable to the underlying trend. >> janet yellen said earlier in the week, if we don't hike now, there will be a sharper hike down the road. she wasn't indicating this is a one-time go. we have to get off of zero. which side of the coin are we? are we talking about an economy that will support fixed income because we're in long-term depression or are we saying next year could be quite good. it could surprise to the upside. >> i think in terms of job growth and -- both backward looking, how much progress we've already made, and forward looking in terms of how much progress we are still likely to make, it's a pretty positive story. i think a lot of the commentary, the backward looking commentary in particular about this weak recovery, i think it's a little misleading. if you look at the labor market. this has not been a weak recovery. >> talking about messaging, did
10:39 am
mar mario draghi get everyone exci e excited and then letting them down yesterday. >> i think the communication was confusing. clearly some of the things that were said at the prior meeting and in the meantime were taken by the markets as signaling something much more aggressive than what they delivered. i think it takes two for a misunderstanding. so, you know -- >> he said whatever it takes. that was the second time he's used whatever it takes. the first time he earned the trust of the market because he delivered. >> so, i do think there was miscommunication. but i think also that, you know, some of it is that markets persuaded themselves because of what they had seen the previous time that it was just a highly, highly likely move. a lot of people ended up on the same side of the border and then
10:40 am
the disappointment was there. >> including the fx strategy team at your company, which had a call to short-term the meeting. >> they were very up front that they misjudged the meeting. paul donovan suggested that people forget the central banks are run by economists. with the december rate hike, many people still don't think they'll hike here because the markets won't let them. we saw that play out yesterday where the economists from germany said, no, you can't give the markets what they're asking for in this instance a valid point from paul donovan. >> i think it is a valid point. i would add one thing to it, namely that european central bankers relative to u.s. central bankers probably put less weight on financial conditions.
10:41 am
they don't think about monetary policy as much in the financial conditions framework as the fed does. that was somewhat evident in watching the press conference yesterday as well. we'll see what draghi says today around the corner. >> are you going? >> yes. >> excellent. >> what would be your question to him? >> well, i think the biggest one is, you know, what exactly was he trying to communicate six weeks earlier and does he think that, you know, there was an excessive kind of back and forth, what kind of answer you would get you don't know. but that is pretty interesting. >> jan, thank you. always good to have you here. jan hatzius, chief economist from goldman sacks. pure storage out with first quarterly numbers since going public in october. the ceo will join squawk alley live next on cnbc.
10:42 am
and can you explain why you recommend synthetic over cedar?
10:43 am
10:44 am
"super food?" is that a real thing? it's a great school, but is it the right one for her? is this really any better than the one you got last year? if we consolidate suppliers, what's the savings there? so should we go with the 467 horsepower? ...or is a 423 enough? good question. you ask a lot of good questions... i think we should move you into our new fund. sure... ok. but are you asking enough about how your wealth is managed? wealth management at charles schwab. this holiday season, gi see you brought a friend? i wanna see, i wanna see. longing. serendipity. what are the... chances. and good tidings to all.
10:45 am
hang onto your antlers. it's the event you don't want to miss. it's the season of audi sales event. get up to a $2,500 bonus for highly qualified lessees on select audi models. i'm jane wells live in san bernardino, with important new information about the investigation into the massacre he here. pete williams is reporting that the wife, tashfeen malik, posted a message on facebook just before the attack. investigators are looking into whether she may have been the radicalizing influence in this couple. she has been a mystery figure in this entire case. we have not seen a picture even of her yet. now this important piece of evidence that she, according to sources, is telling pete
10:46 am
williams at nbc news posted her support, her allegiance to the leader of isis. back to you. the big jobs number in this country strengthening expectations that the federal reserve will raise interest rates in two weeks. is corporate america ready? joining us is mario longhi who also joins us from the national competitive forum in washington. good morning. >> good morning. >> we got this good jobs report. 5% unemployment rate this is not an all-inclusive economic recovery in this country, is it? you're not faeling it. >> it's not an all-inclusive economic recovery. even without looking at the number itself without understanding the details of it, i would wonder how many of those jobs are quality jobs, how many are temporary. in othur environment, we are
10:47 am
seeing the opposite. we are heavily exposed to the energy side which has been dwindling. you're seeing a lot of layoffs on that side and we're suffering from a significant level of dumped material coming into the united states. both are pressuring jobs significantly in our business side. >> one factor is global steel prices are at multi-year lows. how much of that is what is causing some pain in your business? >> what we really have is a massive level of overcapacity in the world. as the united states continues to be the most open country in the world, they are basically just dumping the material here to preserve their own operations and their own jobs. so i believe that the rule of law has to be put in place in earnest, so that everybody plays in the same level playing field. that is what needs to happen. >> let me emphasize, mario, what you're saying. i think the figure is the
10:48 am
chinese are dumping artificially selling at below-market prices, 100 million tons of steel outside of china each year, the equivalent of the top four steelmakers in europe combined. that's what you're describing you're having deal with. why -- why will the politicians not get in there and do what you're asking them to do to not just protect the business but jobs on both sides of the atlantic. >> it's a very tedious process. during that process, a lot of pain is being inflicted and a lot of harm is being done. we worked hard to implement a clear new definition of injury that should create a better condition for assessment of how these activities take place. we should be able do a much quicker trial of all of these
10:49 am
cases. >> your own stock is down over 70% so far this year. similar to arsenal mittal, your biggest competitor in europe. citi did a u-turn on their stock saying we called it too soon. there's no prospect of a trigger point to send these arsenal mittal stocks higher. i assume since you're in the same bulk industry that would apply to your business. how do you see the future. >> it does apply. your comment is correct. we're putting a lot of effort into watching the liquidity, watching the balance sheet, accelerating improvement inside of the business, working closely with our customers to try to create a forecasting that better balances inventories and material flows. we also brought forth significant trade cases that are in the process of being judged d
10:50 am
as we speak. determinations will come in the next two weeks for the first case and more determinations should come on anti-dumping situations that will come out in january, are such and we believe we are correct in our estimations in a way it can create a level playing field, the situation can change quite dramatically if the determinations are correct. -- they are creating new products and initiatives and there is more improvement to be had. also, there is the sign of innovation where we are accelerating the amount of research and development for new
10:51 am
products that will be come in the course of the next couple of years that we will be very, very important, but the process is not done yet. there is more benefits to be acquired. what about playoffs? are there more to come on that front as well? >> i truly hope not. this is -- it's very painful to see. our company made significant progress last year to see every benefit we created to be vanishing in front of our eyes, mainly due to the dumping situation that we are seeing. >> absolutely. when you have 25% of your work force on notices, what does that mean? >> can the fed hike rates in an industrial recession? do you think it will trickle through to the rest of the economy? >> well, we should really be growing at a significantly faster rate. i think we can talk about what the fed is about to do all we want.
10:52 am
. it not only creates more jobs, but stabilizes the economy, so we can have all the energy and differentiation and have the confidence to keep investing, which is an essential feature for every innovation that we come up with. that's what needs to happen. it's proper policies that stimulate growth. >> now you are talking about that in washington today at the national competitiveness forum. mario to share cannededly some of the challenges his business is facing. the ceo of u.s. steel. >> thank you, sarah. >> meantime. >> thank you. >> shares of starbucks rallying once again today gaining nearly 2% this morning. this as the stock continues to climb. it's up nearly 50% so far this year. our next guest says starbucks is prospering because it's keeping up with what he calls the "coffee snobs." joining us here at post nine is the always colorful cnbc contributor and pulitzer prize new york winning columnist jim
10:53 am
stewart. >> good morning. >> there's a new starbucks. it was a revelation to me. there are gleaming machines, and there are single -- not vineyard. single plot, rare beans from all over the world. the barista is a great guy. they must have gotten him at central casting. he is a performance artist. he does all kinds of cool things. >> that's your typical starbucks experience. >> this is where they are headed, and i think this is really -- rather than rest on their laurels. i mean, look, this has been a growth stock. starbucks is not a new idea. this is a pretty mature
10:54 am
industry. they've got comparable sales growth in the high single digits. they've got earnings gains. >> the barista telling me the different -- kind of hand stirring it and moving it around in there, and it took a little bit, and then he handed me the cup. i have to say, it's really good. i mean, obviously at $4 for 12 ounces it should be good. >> you were transfixed by the whole process. >> more trips to brooklyn.
10:55 am
>> starbucks isn't the only one doing this. i recently talked to the ceo of pete's coffee, which is a private company, but they've been buying stakes in intelligensia coffee, stump town, local artisinal coffee. some people are calling this the third wave of coffee that's high-end. starbucks has some advantages. it has sauce and scale and can corner the market on some of the great beans. it has the margins to work with. >>. >> they were at risk of losing that, the brand image. i think the ultimate percentage of the high-end, it may be relatively small. it's important from a brand standpoint to recapture this kind of coolness, this sort of, you know -- that they can get the coffee snobs because that influences everybody all the way down, and the drive-thrus. the other thing i have to mention, they're doing so well, which really shows up in the
10:56 am
numbers. they have this mobile order and payment app that is going gang busters. i mean, they started really early. they were really smart to see that they had to harness the internet, and everybody is flocking. they're doing a 21% of their sales revenue right now coming through the mobile app. it's pretty impressive. >> cramer talks a lot about how it's become a technology company and -- so you are bullish even with a 50% -- >> >> more on what we can expect from squawk alley. good morning. >> good morning. we have a full loan blown rally. dow up nearly 250 points. we'll track that. all major indexes higher. also, the latest on yahoo. starboard not letting up at all on calls for wrau hue to sell its core business and another fundraising for uber. checking on what the valuation is now and what information they're giving new ventures.
10:57 am
all that and more coming up on squawk alley. but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy for my studio. ♪ and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... that's huge for my bottom line. what's in your wallet? don't let it conquer you.. with the capability and adaptability of lexus all-weather drive. this is the pursuit of perfection. at ally bank no branches equals great rates. it's a fact. kind of like ordering wine equals pretending to know wine. pinot noir, which means peanut of the night.
10:58 am
10:59 am
welcome to squawk alley. carl quintanilla with me. john fort with me. kelly evans joining us for the hour as well.
11:00 am
kelly, great to have you. we start with the markets that are rallying. dow up triple digits after the u.s. added 211,000 jobs in the month of november. september, october getting revised higher as well. dominik on the floor looking at some of the tom movers. dom, in a market where good news is perhaps good news today. >> yeah. it's been interesting because we saw a bit of volatility both up and down around the release of that number. the futures market. what we are seeing right now are the interest rates moving a little more to the down side from where they were earlier on right after the jobs report. some of the less economically safe ones doing the heavy lifting. we should point out they're not big parts of the market. they're some of the biggest movers. on the down side, industrials, materials, and energy. right now the only sector moving to the down side right now. again, as oil


info Stream Only

Uploaded by TV Archive on